27 February 2023

How shared ownership could help buyers achieve homeowning ambitions

Liza Campion – Head of Corporate Accounts, Kent Reliance for Intermediaries

For first-time buyers, finally getting a foot on the housing ladder could be the New Year’s resolution that topped their list of priorities in the coming year.

The conundrum that many of them will face is the age-old problem when it comes to purchasing that all-important first property - being able to save a large enough deposit.

Although house prices have dipped slightly from the record highs we saw in 2022 and are predicted to fall further in the coming months, we’re currently going through the worst cost of living crisis in recent memory, inflation is running at over 10%*, there’s a chronic lack of housing stock to choose from and the Help to Buy scheme is now closed for new purchasers.

However, there are still some glimmers of light for those hoping to buy a home in 2023.

Introducing shared ownership

If you’re not familiar with shared ownership, the scheme could offer the ideal solution for those struggling to buy a home on the open market. With lower deposits accepted, the scheme offers first-time buyers the chance to find a place they can call home at an affordable price.

Launched back in the 1970s, shared ownership gives first-time buyers the chance to buy a share of a property, typically between 25% and 75% of the value, and pay rent on the remaining share. Over time, they can choose to buy more additional shares up to 100% of the equity, a process known as ‘staircasing’, until they no longer have to pay any rent.

While this sounds promising for first-time buyers, finding a lender with the appropriate level of experience is essential to solving your shared ownership cases. Before you start with an application, there are three things you need to carefully consider.

  1. Loan amount – There may well be limitations on how much a buyer can borrow, so it’s important to know this from the start, especially if your client is looking to purchase a larger share of the property in the future. This can limit their options moving forward, so it’s important to check.
  2. Buyer ambitions – Each lender will approach shared ownership differently. Some lenders may offer staircasing, while others will provide different rental or mortgages costs. These options benefit your clients in different ways, so understanding their preferences and goals from the start is vital.
  3. Housing associations – Lenders will need to know about the relationship between a housing association and a shared ownership property. It’s important to gather as much information as possible and be aware of anything that may impact the buyer when they come to sell their home in the future.

How Kent Reliance for Intermediaries could help

While many applicants may be turned away due to insignificant deposit levels, Kent Reliance for Intermediaries accept up to 100% of the maximum share value and can now even consider sub-25% share values. In addition, we can also consider 10% deposits on part-buy and part-rent mortgages for shared ownership.

We also offer 100% staircasing which provides better flexibility and opportunities for buyers looking to purchase more shares in their property which is why we’ll only consider properties with housing associations that permit this.

For more information about our shared ownership offering, contact your local business development manager or call us on 01634 888276.

For adviser use only. Please note this content has been supplied by our lender partner and as such, is their responsibility. No party shall have any right of action against Legal & General in relation to the accuracy or completeness of the information in this article.